"What The Next Decade Of Obamacare Will Look Like"
CREDIT: AP Photo/Jon Elswick
On Tuesday, the Congressional Budget Office (CBO) released revised economic projections for the next decade, including a rash of new data about the Affordable Care Act. There are a few big takeaways from the new report:
1. Obamacare’s so-called “insurance company bailout” will actually save the government billions.
Congressional Republicans are contemplating taking the economy hostage unless Democrats agree to repeal a temporary program built into the law called “risk corridors.” The is actually a financial shock absorber meant to shield consumers from premium hikes stemming from insurance industry uncertainty during the health law’s first three years, and Republicans have previously supported more generous versions of the program for Medicare. Now, they’re slamming it as a “taxpayer-funded bailout” of insurance companies under the ACA.
But CBO’s new report finds that the provision will actually save taxpayers and the government a considerable amount of money. Under the risk corridor program, the government takes a cut of the profits from insurance plans that set their premiums too high and redistributes it to insurers that set their premiums too low so that those companies won’t be forced to raise consumers’ monthly rates. According to CBO, “risk corridor payments from the federal government to health insurers will total $8 billion and the corresponding collections from insurers will amount to $16 billion, yielding net savings for the federal government of $8 billion.”
CBO had previously estimated that risk corridors would be budget neutral. Now, the agency predicts that insurance companies are likely to set their monthly premiums too high relative to how much they will have to pay out in medical costs.
2. Obamacare premiums are lower than originally expected.
The Obama administration argued last year that ACA marketplace premiums would be lower than the CBO originally expected. The organization confirmed that on Tuesday, reporting that current marketplace premiums are actually 15 percent cheaper than it predicted last year.
A recent analysis by the consulting firm PricewaterhouseCoopers (PwC) found that the most Silver, Gold, and Platinum plans sold through ACA marketplaces are anywhere from $61 to $1377 cheaper than the average employer-sponsored health plan. An Obamacare Silver plan could be close to $2500 per year cheaper than an employer policy, according to PwC.
3. Obamacare will lower the number of Americans forced to work for health coverage.
Affordable Care Act critics were quick to pick up on a statistic in the new report finding that the health law will cause a reduction in the labor force that amounts to a decline of about two million full-time jobs by 2017. But anything more than a cursory look at the report shows that this is actually a benefit of the ACA.
In fact, the CBO researchers explicitly state that, “[t]he estimated reduction [in labor] stems almost entirely from a net decline in the amount of labor that workers choose to supply, rather than from a net drop in businesses’ demand for labor.” That means Americans won’t necessarily be losing their jobs or being shut out of the job market because of Obamacare. Rather, the health law will give millions of people — particularly elderly Americans who haven’t reached the Medicare eligibility age — affordable options for health coverage without shackling them to a job they may not want.
4. Healthcare.gov’s botched rollout will lead fewer people to seek coverage this year.
Last year, the CBO estimated that seven million Americans would gain insurance through Obamacare’s private marketplaces in 2014; it has now revised that number down to six million due to Healthcare.gov’s botched rollout, which kept millions from signing up for the first month and a half of Obamacare’s six-moth open enrollment period.
CBO now estimates that, “in 2014, about 1 million fewer people will obtain coverage through [Obamacare marketplaces], about 1 million fewer people will enroll in Medicaid and CHIP as a result of the ACA, and about 1 million more people will be uninsured. Those changes primarily reflect the significant technical problems that have been encountered in the initial phases of implementing the ACA.” Still, marketplace enrollment is expected to more than double next year to 13 million Americans, about 85 percent of whom will receive government subsidies to help pay their premiums.
5. Thirty one million Americans will still remain uninsured in 2024 — most of them voluntarily.
Although Obamacare is expected to extend health coverage to 25 million Americans over the next decade, about 31 million people are still expected to remain uninsured under the health law. Tuesday’s report puts that figure into perspective.
The vast majority — 65 percent — of people who will remain uninsured in 2024 will do so voluntarily. About 45 percent of these people will turn down employer coverage or decline to buy insurance through an ACA marketplace, while another 20 percent will refuse to enroll in Medicaid even though they’re eligible for it. Another 9.3 million people won’t be able to get coverage because they are undocumented immigrants who won’t aren’t eligible for Medicaid or federal Obamacare subsidies. And the remaining five percent will be working poor Americans living in states that still haven’t expanded Medicaid by the end of the decade.
Fortunately, the report authors predict that Republican-led states’ opposition to the health law’s optional Medicaid expansion will dissipate in the coming decade. The states currently moving forward with the expansion contain about 40 percent of the working poor who are potentially eligible for new coverage under an expanded Medicaid program. By 2018, CBO estimates that double the number of eligible Americans will live in states that have expanded Medicaid.